# Deposit and Withdraw First-Loss Capital

This tutorial shows you how to deposit and withdraw first-loss capital from a [LoanBroker](/docs/references/protocol/ledger-data/ledger-entry-types/loanbroker) on the XRP Ledger. First-loss capital helps protect vault depositor's assets, acting as a buffer in the event of loan defaults.

The tutorial demonstrates how a loan broker can manage risk by depositing XRP as first-loss capital, and how they can withdraw it when needed.

LendingProtocol
## Goals

By the end of this tutorial, you will be able to:

- Deposit an MPT as first-loss capital into a `LoanBroker` entry.
- Check the available cover balance in the loan broker's pseudo-account.
- Withdraw first-loss capital from a `LoanBroker` entry.


## Prerequisites

To complete this tutorial, you should:

- Have a basic understanding of the XRP Ledger.
- Have an XRP Ledger client library set up in your development environment. This page provides examples for the following:
  - **JavaScript** with the [xrpl.js library](https://github.com/XRPLF/xrpl.js). See [Get Started Using JavaScript](/docs/tutorials/javascript/build-apps/get-started) for setup steps.


## Source Code

You can find the complete source code for this tutorial's examples in the code samples section of this website's repository.

## Steps

### 1. Install dependencies

JavaScript
From the code sample folder, use npm to install dependencies:


```bash
npm install xrpl
```

### 2. Set up client and accounts

To get started, import the necessary libraries and instantiate a client to connect to the XRPL. This example imports:

- `xrpl`: Used for XRPL client connection and transaction handling.
- `fs` and `child_process`: Used to run tutorial set up scripts.


JavaScript
// IMPORTANT: This example deposits and withdraws first-loss capital from a
// preconfigured LoanBroker entry.

import fs from 'fs'
import { execSync } from 'child_process'
import xrpl from 'xrpl'

// Connect to the network ----------------------
const client = new xrpl.Client('wss://s.devnet.rippletest.net:51233')
await client.connect()
Next, load the loan broker account, loan broker ID, and MPT issuance ID.

JavaScript
// This step checks for the necessary setup data to run the lending protocol tutorials.
// If missing, lendingSetup.js will generate the data.
if (!fs.existsSync('lendingSetup.json')) {
  console.log(`\n=== Lending tutorial data doesn't exist. Running setup script... ===\n`)
  execSync('node lendingSetup.js', { stdio: 'inherit' })
}

// Load preconfigured accounts and LoanBrokerID.
const setupData = JSON.parse(fs.readFileSync('lendingSetup.json', 'utf8'))

// You can replace these values with your own
const loanBroker = xrpl.Wallet.fromSeed(setupData.loanBroker.seed)
const loanBrokerID = setupData.loanBrokerID
const mptID = setupData.mptID

console.log(`\nLoan broker address: ${loanBroker.address}`)
console.log(`LoanBrokerID: ${loanBrokerID}`)
console.log(`MPT ID: ${mptID}`)
This example uses preconfigured accounts and loan broker data from the `lendingSetup.js` script, but you can replace `loanBroker`, `loanBrokerID`, and `mptID` with your own values.

### 3. Prepare LoanBrokerCoverDeposit transaction

Create the [LoanBrokerCoverDeposit transaction](/docs/references/protocol/transactions/types/loanbrokercoverdeposit) object:

JavaScript
// Prepare LoanBrokerCoverDeposit transaction ----------------------
console.log(`\n=== Preparing LoanBrokerCoverDeposit transaction ===\n`)
const coverDepositTx = {
  TransactionType: 'LoanBrokerCoverDeposit',
  Account: loanBroker.address,
  LoanBrokerID: loanBrokerID,
  Amount: {
    mpt_issuance_id: mptID,
    value: '2000'
  }
}

// Validate the transaction structure before submitting
xrpl.validate(coverDepositTx)
console.log(JSON.stringify(coverDepositTx, null, 2))
The `Amount` field specifies the MPT and amount to deposit as first-loss capital. If the transaction succeeds, the amount is deposited and held in the pseudo-account associated with the `LoanBroker` entry.

### 4. Submit LoanBrokerCoverDeposit transaction

Sign and submit the `LoanBrokerCoverDeposit` transaction to the XRP Ledger.

JavaScript
// Sign, submit, and wait for deposit validation ----------------------
console.log(`\n=== Submitting LoanBrokerCoverDeposit transaction ===\n`)
const depositResponse = await client.submitAndWait(coverDepositTx, {
  wallet: loanBroker,
  autofill: true
})
if (depositResponse.result.meta.TransactionResult !== 'tesSUCCESS') {
  const resultCode = depositResponse.result.meta.TransactionResult
  console.error('Error: Unable to deposit cover:', resultCode)
  await client.disconnect()
  process.exit(1)
}
console.log('Cover deposit successful!')
Verify that the transaction succeeded by checking for a `tesSUCCESS` result code.

### 5. Check cover balance after deposit

Retrieve the cover balance from the transaction result by checking the `LoanBroker` entry in the transaction metadata.

JavaScript
// Extract cover balance from the transaction result
console.log(`\n=== Cover Balance ===\n`)
let loanBrokerNode = depositResponse.result.meta.AffectedNodes.find(node =>
  node.ModifiedNode?.LedgerEntryType === 'LoanBroker'
)
// First-loss capital is stored in the LoanBroker's pseudo-account.
console.log(`LoanBroker Pseudo-Account: ${loanBrokerNode.ModifiedNode.FinalFields.Account}`)
console.log(`Cover balance after deposit: ${loanBrokerNode.ModifiedNode.FinalFields.CoverAvailable} TSTUSD`)
The `LoanBroker` pseudo-account address is the `Account` field, and `CoverAvailable` shows the cover balance.

### 6. Prepare LoanBrokerCoverWithdraw transaction

Create the [LoanBrokerCoverWithdraw transaction](/docs/references/protocol/transactions/types/loanbrokercoverwithdraw) object:

JavaScript
// Prepare LoanBrokerCoverWithdraw transaction ----------------------
console.log(`\n=== Preparing LoanBrokerCoverWithdraw transaction ===\n`)
const coverWithdrawTx = {
  TransactionType: 'LoanBrokerCoverWithdraw',
  Account: loanBroker.address,
  LoanBrokerID: loanBrokerID,
  Amount: {
    mpt_issuance_id: mptID,
    value: '1000'
  }
}

// Validate the transaction structure before submitting
xrpl.validate(coverWithdrawTx)
console.log(JSON.stringify(coverWithdrawTx, null, 2))
### 7. Submit LoanBrokerCoverWithdraw transaction

Sign and submit the `LoanBrokerCoverWithdraw` transaction to the XRP Ledger.

JavaScript
// Sign, submit, and wait for withdraw validation ----------------------
console.log(`\n=== Submitting LoanBrokerCoverWithdraw transaction ===\n`)
const withdrawResponse = await client.submitAndWait(coverWithdrawTx, {
  wallet: loanBroker,
  autofill: true
})
if (withdrawResponse.result.meta.TransactionResult !== 'tesSUCCESS') {
  const resultCode = withdrawResponse.result.meta.TransactionResult
  console.error('Error: Unable to withdraw cover:', resultCode)
  await client.disconnect()
  process.exit(1)
}
console.log('Cover withdraw successful!')
Verify that the transaction succeeded by checking for a `tesSUCCESS` result code.

### 8. Check cover balance after withdrawal

Retrieve the updated cover balance from the transaction result.

JavaScript
// Extract updated cover balance from the transaction result
console.log(`\n=== Updated Cover Balance ===\n`)
loanBrokerNode = withdrawResponse.result.meta.AffectedNodes.find(node =>
  node.ModifiedNode?.LedgerEntryType === 'LoanBroker'
)
console.log(`LoanBroker Pseudo-Account: ${loanBrokerNode.ModifiedNode.FinalFields.Account}`)
console.log(`Cover balance after withdraw: ${loanBrokerNode.ModifiedNode.FinalFields.CoverAvailable} TSTUSD`)

await client.disconnect()

The `CoverAvailable` field now shows the reduced balance after the withdrawal.

## See Also

**Concepts**:

- [Lending Protocol](/docs/concepts/tokens/lending-protocol)


**Tutorials**:

- [Create a Loan Broker](/docs/tutorials/how-tos/set-up-lending/use-the-lending-protocol/create-a-loan-broker)


**References**:

- [LoanBrokerCoverDeposit transaction](/docs/references/protocol/transactions/types/loanbrokercoverdeposit)
- [LoanBrokerCoverWithdraw transaction](/docs/references/protocol/transactions/types/loanbrokercoverwithdraw)